New York regulator grants virtual license to bitcoin ATM operator

FILE PHOTO: The Bitcoin logo is seen on a pillow on display at the Consensus 2018 blockchain technology conference in New York City

FILE PHOTO: The Bitcoin logo is seen on a pillow on display at the Consensus 2018 blockchain technology conference in New York City, New York, U.S., May 16, 2018. REUTERS/Mike Segar/File Photo

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - New Yorkers will be able to use their mobile phones to obtain bitcoin or sell it for cash at kiosks similar to ATMs in and around New York City after the state Department of Financial Services said on Thursday it has approved the virtual currency license of Coinsource Inc.

Bitcoin teller machines operator Coinsource, based in Fort Worth, Texas, has 40 bitcoin kiosks in the state, located in New York City and Westchester and Nassau Counties. The company allows customers to insert cash and buy bitcoin and store it on their mobile wallet, or sell bitcoin for cash, by scanning their mobile wallet at the kiosk.

"Today's approval is a further step in implementing strong regulatory safeguards and effective risk-based controls while encouraging the responsible growth of financial innovation," Financial Services Superintendent Maria T. Vullo said in a statement on Thursday.

The state Department of Financial Services has approved 12 charters or licenses so far for companies in the virtual currency marketplace.

The New York regulatory agency said Thursday's approval follows a comprehensive and rigorous review of Coinsource's application and is subject to significant regulatory conditions.

"New York represents not just a center of global innovation but also one of our largest target markets," said Sheffield Clark, Coinsource's chief executive officer.

Founded in 2015, Coinsource deploys ATMs to key population centers across the United States, with more than 200 machines in 19 states, including the District of Columbia.

Coinsource said the majority of customers choose to use bitcoin ATMs as an alternative to online exchanges, which require highly technical knowledge, has long transaction delays, high fees, and limited customer service support. Aside from that the ATM operator said online exchanges are vulnerable to manipulative trading activity and fund hacks.

"Bitcoin is no longer a fringe currency, and in 2018, is increasingly being adopted by the mainstream," Sheffield said.